Risk sentiment was mixed heading into Friday as geopolitical tensions around the Strait of Hormuz kept energy markets on edge, while the ECB's publication of its Economic Bulletin — including the new ECB-BIG credit conditions index — offered a constructive read on euro-area banking resilience with no immediate rate action. Fed Chair Kevin Warsh reiterated a data-dependent stance with the policy rate held at 3.50–3.75%, redirecting market attention toward Jackson Hole in late August for any broader signals. The VIX eased 4.17% to 15.15 and the Nikkei VIX fell sharply by 9.95% to 29.78, suggesting some de-escalation of near-term fear, even as AI-linked earnings disappointments from AppLovin (–19.7%) and Datadog (–19.0%) weighed on growth sentiment. Friday's US non-farm payrolls print — forecast at 85,000 against a prior 57,000 — will be the dominant macro catalyst of the session, with any significant miss or beat likely to reprice Fed expectations heading into Jackson Hole.
For Asia-Pacific markets, the energy price surge — Brent crude up 3.83% to $82.49 and WTI up 2.75% to $77.29 — is the most direct overnight transmission, benefiting Australian energy and resources exposures while adding inflationary complexity for import-dependent economies. The ASX 200 closed Thursday's session up 0.47% to 9,271.6 with its own volatility gauge (ASX VIX) at a low 11.06, signalling domestic calm even as KOSPI plunged 4.58% and HKEX fell 1.49%, pointing to divergent regional risk appetite. Iron ore's 1.46% lift to $95.28 per tonne adds a constructive signal for Australian bulk commodity producers, while the DXY ticking up 0.28% to 99.97 will keep pressure on commodity-linked AUD crosses heading into the payrolls number.